OUR LOW FOREIGN DIRECT INVESTMENTS

One example of great foreign  investment is the Nike, a shoe maker that relentlessly has been all over the south east to take advantage of cheap labor, and literally a shoe that wreck massive employment to countries where they go. 

This Nike story makes me reminiscent of the days of Adidas in the Philippines manufacturing this branded shoe for export. It had closed shop because of the bargaining problems with labor and thousands of jobs were lost. 

At the moment  one of its plants in south east Asia as located in Indonesia alone,  employs to about 170,000 and the Indonesian government has benefited from this investment that solved part of its unemployment. It has plants in China, and opening more in the region to take business because of cheap labor.

In Indonesia, Nike thrived well in inland areas where labor cost is low and mutually served to solved unemployment problems in the countryside by giving them stable source of jobs that was only dependent of seasonal sources. Though Nike can be regarded to as a business looking for cheap labor to make profits, the mutuality is the same significant between governments and investors.

“Nike is highly labor-intensive.” Initially, Nike produced most of its shoes elsewhere in East Asia. As labor costs rose in these older locations – Japan, South Korea and Taiwan – Nike relocated its factories to China, Thailand, and Indonesia. Today, Nike also has plants in Vietnam. 
-Gerardo P. Sicat (The Philippine Star) | Updated April 17, 2013 - 12:00am

The Labor cost in Indonesia today is well more higher than the Philippines, as it ranges from about 6 USD an hour compared to 1.6 here, which is more at par with China. Japan has 27 rate, Malaysia 8 per hour, and China has 1.6 at par with us.

In this rate, the question rings why the Philippines has lost in terms of FDIs among with our neighbors in the region knowing that we have the same labor cost rate with that of China. Knowing further that we are competitive in labor, why no FDIs  flood in the country?

The problem can be identifiable in many aspects that we know, we only need increasing our promotion, incentives, relax in regulations and labor rights in the country that makes investments difficult to be considered.


Nike in Indonesia – employing more than a hundred thousand workers